Horizontal Equity Effects in Energy Regulation
Choices in energy regulation, particularly whether and how to price externalities, can have widely different distributional consequences both across and within income groups. Traditional welfare theory focuses largely on effects across income groups; such “vertical equity” concerns can typically be addressed by a progressive redistribution of emissions revenues. In this paper, we review alternative economic perspectives that give rise to equity concerns within income groups, or “horizontal equity,” and suggest operational measures. We then apply those measures to a stylized model of pollution regulation in the electricity sector. In addition, we look for ways to present the information behind those measures directly to stakeholders. We show how horizontal equity concerns might overshadow efficiency concerns in this context.
Published Versions
Horizontal Equity Effects in Energy Regulation, Carolyn Fischer, William A. Pizer. in Energy Policy Tradeoffs between Economic Efficiency and Distributional Equity, Deryugina, Fullerton, and Pizer. 2019
Carolyn Fischer & William A. Pizer, 2019. "Horizontal Equity Effects in Energy Regulation," Journal of the Association of Environmental and Resource Economists, vol 6(S1), pages S209-S237.
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